SBI Q2 profit grows by 40 per cent

Beating projections, India’s leading financial conglomerate State Bank of India has posted 40 per cent growth in net profit for the second quarter of this fiscal on high interest income.

Crediting the good numbers to income from high interest rates and fee-based income, SBI Chairman O P Bhatt said bank has been giving good returns consistently in the last 5-6 quarters and growth has beaten projections by analysts.

SBI has posted a net profit of Rs 2,259.72 crore for the quarter, a growth of 40 per cent against 36 per cent in the same quarter a year ago. The bank’s profit in the September quarter last year stood at Rs 1,611.42 crore.

The total income rose to Rs 17,909.64 crore in the second quarter from Rs 13,658.22 crore a year ago, an increase of 31 per cent.

The bank registered a deposit growth of 67.93 per cent at Rs 57,861 crore. Its current and savings account (CASA) ratio was up by 26 basis points to 39.71 per cent. Advances of the bank grew by 162.35 per cent to Rs 51,020 crore.

Return on assets was flat at 0.99 per cent, while return on equity was at 14.64 per cent at the end of September 2008.

Besides, home loans grew by 23.47 per cent, auto loans by 30.48 per cent and education loan by 43.81 per cent.

Submit KYC details to avoid account freeze: SBI

Country’s largest lender State Bank of India on Thursday asked its customers to immediately comply with the Know-Your-Customer guidelines, failing which their accounts would be freezed.

“All account holders of the bank who have not yet complied with the KYC guidelines are hereby requested to make their accounts KYC compliant by contacting their home branches and completing the required documentation latest by October 31,” SBI said in a notice.

As per provisions of the Prevention of Money Laundering Act 2002 and the direction given by RBI, all customers are required to comply with KYC guidelines.

Banks were advised to follow certain customer identification procedures for opening of accounts and monitoring of transactions of suspicious nature by the RBI in context of the recommendations made by the Financial Action Task Force on Anti-Money Laundering standards and on Combating Financing of Terrorism.

Failing to comply with the guidelines would result in freezing of account operations, it said.

“Several account holders have still not submitted local address and identity proofs, thereby violating the KYC guidelines issued by the apex bank on account opening,” a senior SBI official said.

Despite repeated reminders sent by the bank through registered and regular posts to such customers, there has not been any response yet and it seems they are not interested in operating the accounts, he said.

It is a final notice after which the accounts would be freezed, the official added.

The largest bank having a branch network of about 10,400 has over 13 crore customers.

Free clinic by Financial planners

A group of financial planners will conduct a free clinic this week for people who have questions or concerns about their finances.

The Financial Planning Association Kansas Chapter will have about 20 planners available from 4 to 9 p.m. Thursday at the WSU Hughes Metropolitan Complex at 29th Street North and Oliver.

Organizer Richard Stumpf said the clinic is for people who have questions but don’t know who to ask.

Any topic is open for discussion, including 401(k) accounts, estate planning, wills and taxes. No documentation is necessary. However, participants are encouraged to bring paperwork — account statements, wills, etc. –if they want to talk about specifics.

Stumpf said planners who participate are required to sign a pledge that they will not market their services.

Rushikulya Gramya Bank and Bajaj Allianz Life enter into ‘Bancassurance pact’

Rushikulya Gramya Bank (RGB), a premier Regional Rural Bank (RRB) of Orissa operating in Ganjam and Gajapati districts, has joined hands with Bajaj Allianz Life Insurance, India’s leading private life insurance company to provide life insurance solutions through its branches.

Under the arrangement, Rushikulya Gramya Bank will offer insurance products through its distribution network of over 79 branches, spread over in two districts.

Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between two leading conglomerates- Allianz AG, one of the world’s largest insurance companies, and Bajaj Auto, one of the biggest two and three wheeler manufacturers in the world.

The insurance firm possesses the strongest distribution network in the country with its 1200 owned branches across more than 950 towns and rapidly extending Bancassurance partnerships.

Money Manager: A link between financial planning firms and prospective financial advisor seekers

From the very beginning, Money Manager developed lasting relationships with seekers and financial planning companies and always showed its gratitude for using the site as a bridge for future assets management.

Money Manager is an online site that creates a link between financial planning firms and prospective financial advisor seekers. It aims to collect profiles of services of different registered financial advisor and advising firms and deliver them to the users who are looking for such services. Some of these services include investment advisory services, credit counselling services, debt consolidation services, or a combination of such services.

The need for financial planning services is gradually increasing as life is becoming faster and more hectic; people conversely want to focus more on the meaningful aspects of their lives rather than spend their significant time and stress themselves in managing their assets. Moreover, the help of professional financial planning firms is becoming more effective as they continuously come up with new strategies and management tools to plan out strengthening the customers’ financial assets. Registered financial advisors enable their clients to have strong control on how to protect their assets and constantly make them grow.

Financial planning firms can be needed in any stage of a person’s life, and it is nice to know that they have built a solid industry, and they are here to stay. Whether it be about retirement, a change of job level, a change of civil status, a financial bankruptcy, or an issue of inheritance, Money Manager can help seekers of financial planning firms in choosing the best and most reputable institution there is. Money Manager ensures that the financial advisors and financial planning firms in its database are registered, legal, reputable, and have high degree of expertise.

From the very beginning, Money Manager developed lasting relationships with seekers and financial planning companies and always showed its gratitude for using the site as a bridge for future assets management. What sets Money Manager apart from other financial services marketing sites is its dedicated evaluation of its participation in the success of dynamics of the seeker and the helper, always making sure that the best client meets the best advisor and vice versa.

2 new retirement plans launched by Future Generali

The insurance venture between Future group India and Generali group Italy, the Future Generali India, announced two new retirement plans. The plans will be called Future Pension Plan and Future Pension Advantage Plan (Which is a ULIP)

The Future Generali India Life Insurance’s CEO & Managing Director Jayant Khosla told reporters “We are launching two retirement plans which offer distinct and relevant advantages to customers in line with their needs and aspirations. The Future Pension Advantage plan will have 40-80 years age band.”

The Future Pension Plan:

• Offers a way to create a regular stream of income after retirement.
• Guaranteed addition of 5 per cent to accumulated pension fund after 15 years.

The Future Pension Advantage Plan:

It offers a minimum policy term of 2 years under single premium and 5 years under regular premium.

There is also a tax benefit under section 80 C and 10 (10D) of the Income Tax Act.

Future Generali is targeting achieving 4 lakh policies in FY’09. Both the promoters have infused Rs 200 crore capital and are adding around Rs 75-100 crore every quarter, Khosla said. “We are targeting 25 per cent of our sales through mallassurance and 75 per cent through our alliances and distributors.

We have started offering insurance products through 300 Future Group malls out of 450. The Future group plans to add 1,000 malls in the next two years period,” Khosla said. Generali is keen on replicating Future’s mallassurance concept globally, he added.

SBI to launch new services from its Dubai center

State Bank of India (SBI) is set to expand its footprint in the Gulf, with an offer of brand new services for its clients in the United Arab Emirates (UAE). Armed with a Category 1 licence from the Dubai Financial Services Authority (DFCA), SBI will now be in a position to accept deposits, provide credit, arrange credit for investments, and offer advice on financial products. The bank will launch its new operations from its branch at the Dubai International Financial Centre (DIFC), a rapidly growing global hub for banking, capital markets, insurance, asset management and other financial services.

“Our services are open to all nationals as we are determined to acquire a more prominent niche as a global player in international banking circles,” said A. J. Vidyasagar, Chief Executive Officer of SBI’s branch at DIFC. He added that SBI, ranked fifty seventh globally, already had a natural advantage of servicing Indian clients involved with trading activity or investments in the Gulf.

Mr. Vidyasagar pointed out that the branch would provide working capital as well as trade finance, both fund based and non-fund based, term loans and project financing.

‘Fixed Maturity Plan 370 Days October 2008’ Launched by HDFC Mutual Fund

HDFC Mutual Fund house has begins initial offering period of HDFC Fixed Maturity Plan 370 Days October 2008 (1), a close ended income scheme under HDFC Fixed Maturity Plans-Series IX.

The face value of new issue is Rs 10 per unit and the NFO will be open for subscription on 16 October and close for subscription on 20 October 2008.

The investment purpose of the fund is to generate regular income through investments in debt, money market instruments and government securities. The scheme will invest 60%-100% in debt and money market instruments, with low to medium risk profile.

The Benchmark Index for the Scheme would be Crisil Short-Term Bond Fund Index, and it offers wholesale plan and retail plan with growth and dividend option.

Under retail plan, the minimum application amount will be Rs. 5,000 and in multiples of Re. 1 thereafter. However under the wholesale plan, the minimum investment amount is Rs. 1 crore and in multiples of Re. 1 thereafter.

The newly launched scheme will not levy entry load charged due to its close-ended structure. But it may charge 1.50% an exit load if the units are redeemed or switched out before maturity.

HDFC Mutual Fund has been one of the best performing funds in recent years. The sponsors of the fund are housing finance major HDFC AMC and British investment company Standard Life Investments.

As of March 2008, the total assets under management stood at Rs 62,747 crores, as compared to Rs. 36,421 crores in the previous year.

“Except SBI and HDFC, most credit card companies have already revised their interest rates at least twice within six months. Now, all of them will shy from increasing their interest rates again. However, in case of customers who’re paying on revolving credit basis and have missed their payments have been pushed to new slabs or in the existing slab, their rates have been increased. Also, the credit limit of many customers have been slashed” said a senior official of a credit card company.

While ICICI currently charges an interest rate within a slab of 1.5-3.75%, Citibank charges anything between 1.5 and 3.5%. Similarly, the current slab for Standard Chartered is between 2.49% and 3.40% per month. American Express vice-president (marketing) Amit Dutta said in their case, he doesn’t foresee any increase in rates or decrease in credit limit.

“Our revenues are based on high-spending card members who enjoy big credit limits. We’re not going to do anything that affects our customer base,” he said. The company already has an interest rate hovering around 3.5%.

RBI asks banks to reform the credit card industry

The reckless and irresponsible way in which the banks and credit card issuers in India have been behaving has prompted the Reserve Bank of India (RBI) to introduce some remedial measures as listed below.

(1) Issuing unsolicited cards: As a rule no body who does not seek one should be given a card. In case such cards are issued, activated and billed without the customer’s consent, banks should not only reverse the entries but pay a fine amounting to twice the value of such outstanding.

(2) There have been instances of new cards being intercepted and misused by unscrupulous elements before they reach customers. The issuing banks will be responsible for such monetary loss. As a rule there should be safeguards against misuse. The RBI suggests one or other of fraud-minimising devices such as photo identity cards, embossing a PIN and signature lamination.

(3) Wherever cards have been packaged with an insurance element — commonly accident insurance — details such as the nature and extent of insurance, other conditions if any, should be explicitly stated. Also, the person in the insurance company who can be contacted by the customer should be mentioned.

(4) Reasons for rejecting a card application should be communicated to the applicants.

(5) Banks should get explicit permission from customers for sharing information about them.

(6) Customer education should receive top priority and cover the entire gamut of credit card operations. Illustrative examples should be used. Call centre employees should be suitably trained.

(7) Closure and blocking of lost cards should be given top priority.

Finance minister constitutes a group to assess liquidity requirements

The Finance Minister, P Chidambram on receiving a large number of representations from banks, other financial entities/intermediaries, corporates and small businesses has expressed that the issue of liquidity must be addressed in a comprehensive manner. These institutions have constantly pressing that intermediation of credit must take place smoothly and efficiently.

The Finance Minster has therefore decided to constitute a group to make a quick assessment of the requirements of liquidity and advise the Government. The group will be headed by Shri Arun Ramanathan, Finance Secretary and Secretary (Financial Services). It will consist of:

(i) Representative of RBI

(ii) Shri T.S. Narayanaswamy, Chairman, IBA & CMD, Bank of India

(iii) Shri U.K. Sinha, CMD, UTI

(iv) Shri Y. M. Deosthalee, CFO, L&T & Director-in-charge, L&T Finance Limited

(v) Shri R.M. Malla, CMD, SIDBI

The group has been authorized to co-opt any more members, if necessary.

The group has been requested to begin work immediately, also visit Mumbai, and submit an interim report within a week.